The Bright Line of Demarcation

In 1953, Charles Wilson, President of General Motors and nominee for Secretary of Defense, uttered his famous quote, "…for years I thought that what was good for our country was good for General Motors, and vice versa." Fewer and fewer people agree these days with the vice versa part – that we all benefit from General Motors.

This week, Al Hubbard, economic adviser to George Bush said, "It is unfortunate that General Motors is going to have (layoffs) at the same time Toyota and other companies are expanding in the U.S. The important thing is that the overall economy is strong." If that is not a strong enough signal that times have changed, Bush said concerning GM’s plea for help with its pension debt, "And so my message to corporate America is: You need to fulfill your promises." Remember, this is a Republican talking.

There is an article from the Dallas-Fort Worth Star Telegram from a few months ago that lays out just how pathetically and unethically General Motors has been run. Worse, a fellow by the name of Henderson has just been named GM’s CFO and is widely regarded as the heir apparent to the top job – which will probably open up soon. Henderson – surprise, surprise – is an accountant. The man has never worked in a factory a day in his life, yet he will soon be in charge of what was once a great manufacturing company.

There are people out there – highly paid people who have a lot of influence – who are the enemy of manufacturing excellence in America. It has been 25 years since Norm Bodek brought the Toyota Production System to this country. It has been over fifteen years since Jim Womack, et al introduced the concept of Lean. It has been longer since Bill Smith pioneered Six Sigma at Motorola. Senior executives like Miller at Delphi, Wagoner and Henderson at GM, and many, many others cannot possibly plead ignorance. They are very, very intelligent people who have proven their skills with financial manipulations. It is hard to imagine they do not know all about Toyota, Lean and Six Sigma. It seems apparent that they have chosen to reject it. In doing so they are destroying a huge element of manufacturing in America.

Josh Peters, with an investment rag called Morningstar, wrote," "At GM, union concerns comes first, management’s own interest comes first, suppliers come first, dealers even come first. Shareholders don’t come first." If anyone on the streets of Chicago sees this guy, please take away his car keys and keep him away from heavy machinery until he sobers up. Sadly, the people calling the shots at GM seem to agree with him. They are meeting this week to wrestle with the agonizing decision of whether to pay another quarterly dividend – despite losing money and pleading to Washington and the union that they cannot fulfill the promises they made to employees. Even Iron City Beer in Pittsburgh has petitioned the government to take them off the hook for their pension plan, threatening to file for bankruptcy if it doesn’t happen. The horde of very well paid business leaders failing in their fundamental responsibility to produce a decent product – from Chevrolets to beer – running to Washington with a briefcase full of excuses is incredible. It sounds like Washington is getting tired of listening to them.

The gap between senior managers who ‘get it’ – that is, they understand that it is all about creating real value through excellent manufacturing, rather than financial manipulations and trickier marketing – and those that don’t seems to be widening. In a recent article, I wrote that there is no bright line of demarcation between lean manufacturers and traditional manufacturers, and that is true. Many are in the middle struggling with what lean really means and how to get there. However, there does seem to be a brightening line of demarcation between senior managers who get it and those who don’t.

There also seems to be a growing public awareness of the gap between companies that focus on products and customers, and companies that focus on Wall Street. There is no great public outcry of sympathy for GM or Delphi. The public is tired of excuses. As Toyota and other foreign manufacturers invest more and more in this country, there is less and less reason for the average American to believe that Wilson is right any more. If GM wants to continue to drive itself into the ground, paying its executives absurd salaries and bonuses, and paying unjustifiable dividends until there is no cash left, they will find no one who thinks that keeping GM around is particularly good for America. Nor will they find anyone around to cry over their demise.

Comments

For one of the domestics, I’ve seen presentations up to the V.P. level. I think, since a lot of those guy have a finance and marketing background, they’d be happy to wither the company to a marketing organization rebranding what is made by everyone else. Manufacturing, engineering and design are such difficult things to manage and there are such easy profits when geniuses market to the masses. Foolishness! This is the same way all of the electronics firms withered away. I hope the best for the domestics, but I fear they are like the oak tree in Atlas Shrugged:

“The great oak tree had stood over the Hudson, in a lonely spot on the Taggart estate. Eddie Willers, aged seven, liked to come a look a that tree. It had stood there for hundreds of years, and he thought it would always stand there. Its roots clutched the hill like a fist with fingers sunk into the soil, and he thought that if a giant were to seize it by the top, he would not be able to uproot it, but would swing the hill and the whole of the Earth with it, like a ball at the end of a string. He felt safe in the oak tree’s presence; it was a thing that nothing could change or threaten; it was his greatest symbol of strength.
“One night, lightning struck the oak tree. Eddie saw it the next morning. It lay broken in half, and he looked into its trunk into the mouth of black tunnel. The trunk was only an empty shell; its heart had rotted out long ago; there was nothing inside- just a thin gay dust that was being dispersed by the whim of the faintest wind. The living power had gone, and the shape it left had not been able to stand without it.
– Atlas Shrugged, Ayn Rand

I read this when I was 18. I’ve worked in the auto industry since I was 18. This passage haunts me. I think it too well describes the domestics today. We are just waiting for that lightning bolt.